New OECD publication, Basic Income as a Policy Option: Can it add up?

By Citizens Basic Income Trust12th June 2017

OECD, Basic Income as a Policy Option: Can it add up? OECD Publishing, Paris. Download the publication here.

This paper, along with related data and technical information, is a valuable contribution to the OECD’s ‘Future of Work’ project. The paper recognises the advantages of an unconditional income, and offers a survey of current pilot projects and other developments ( – one inaccuracy: Sommer’s book A Feasible Basic Income scheme for Germany is not about a Basic Income scheme). The paper then tests a particular kind of Basic Income scheme in relation to a number of different countries’ existing tax and benefits systems. The scheme envisaged would abolish tax allowances and ‘most existing types of cash benefits’, and would be revenue neutral. The paper contains a useful discussion of different employment market incentive and disincentive effects, finds that the scheme envisaged would impose losses on different varieties of households in different countries, and also finds that in general the scheme would not reduce poverty levels, and that in the UK it would increase poverty. The paper also suggests that a further ‘challenge’ would be that a Basic Income would make it more difficult to ‘target’ ‘incentives’ – such as benefits sanctions – on jobseekers. That’s a point of view. Tony Atkinson’s ‘Participation Income’ is discussed, but without any recognition of the significant administrative challenges that such a scheme would encounter, and the bureaucratic intrusion that it would impose. An interesting and appropriate conclusion is that to roll out a Basic Income for one demographic group at a time, starting with young adults, would avoid many of the problems listed earlier in the paper.

In its final section the paper does discuss the possibility of implementing a Basic Income scheme that leaves in place means-tested benefits and recalculates them to take into account each household’s Basic Incomes and any changes in net earnings, but it then does no further work on such an option. This is a pity, as to do so would have enabled the researchers to respond to many of their own hesitations about Basic Income. As we have shown (https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em5-16), a scheme that retains and recalculates means-tested benefits could largely avoid losses for low-income households and could reduce poverty. What would be really helpful would be to see further research from the OECD on a wider variety of types of Basic Income scheme, including schemes that retain and recalculate means-tested benefits.

The paper ends with a clear recognition that the Basic Income debate is stimulating a wide-ranging discussion about the kinds of social security system that we shall need. The paper is itself a useful contribution to that debate.